Tuesday, 6 May 2008

Time magazine has a review of a new book from the behavioural economist Richard Thaler and his colleague, the legal scholar Cass Sunstein, called Nudge: Improving Decisions About Health, Wealth and Happiness.

This is the latest in a spate of books which collectively detail the myriad ways in which humans are far from rational in their decision making. According to the review, Thaler and Sunstein show how these irrationalities can be exploited for the betterment of society - "protecting people from cognitive and social forces that lead them to decisions that even they would describe as poor."

To take a couple of examples from the review, it turns out that people can be encouraged (or "nudged") to use less gas and electricity, simply by letting them know how much they use in comparison with their neighbours. Similarly, the numbers of people signed up as organ donors could be massively increased by making it an opt-out system rather than an opt-in system, as we currently have here in the UK.